Russia's four-week average seaborne oil exports fell to 3.11 million barrels a day as of July 14, down by almost 600,000 barrels or 17% from their recent peak in April, Bloomberg has reported. The country's seaborne crude shipments have now sunk to the lowest since January and are likely to remain that way at least to the end of August, thanks to a rebound of domestic refining rates to a six-month high. China and India are likely to feel the export cuts most keenly since they buy more than 80% Russian seaborne crude sales. However, the barrels that have been taken off the market represent a small fraction of their total crude purchases, meaning Chinese and Indian buyers could easily replace them with crude from other markets.
"The sharp drop in July isn't a one-off event," Viktor Kurilov, senior oil markets analyst at consultant Rystad Energy A/S, has told Bloomberg.
Rystad Energy has predicted that Russia's seaborne crude flows will remain capped at around 2.7 million barrels a day in July and August but rebound slightly to 2.9 million barrels a day in September when Russian refineries are expected to begin their traditional autumn maintenance. That's a considerable drop from exports of 3.6 million to 3.7 million barrels per day recorded in April and May as repeated Ukrainian drone attacks disrupted domestic refining.
"The levels seen in April or May are not to be repeated in 2024, barring large-scale drone attacks that would debilitate even more refineries than the spring strikes," Viktor Katona, lead crude analyst at intelligence firm Kpler, has told Bloomberg. Katona has predicted that Russia's seaborne crude supplies will hover near 3 million barrels a day for the rest of the year.
Meanwhile, Ukraine has cut oil supplies to Slovakia and Hungary by Russia's oil and gas giant Lukoil. Lukoil supplies Russian oil to Europe via the Soviet-built Druzhba pipeline and stands as the last major functioning Russian oil supply route to the continent. The European countries are, however, still receiving oil from other Russian companies.
Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More